Rassense aims to increase its enterprise value and generate wealth for its employees and shareholder employees.
Sanjay Kumar, MD & CEO, Rassense Pvt Ltd
1. Can you tell us about the inspiration behind founding Rassense Pvt Ltd and the journey so far?
When I was planning the entry of Elior in India with the then CEO of Elior Group, Mr. Phillipe Salle, I realized that India, despite being one of the largest markets globally, lacked a domestically owned, nationwide food service company. Even though food services employ the second highest number of people in the country after real estate, both the top two Industry players in the category were foreign owned and I think in a category like food, there is a tremendous opportunity for an Indian company which understands the diversity of Indian cuisine, to emerge as national player and plug the gap between a standardized service offering versus a locally crafted offer matched to regional preferences.
The inspiration came from my first job in Marico where the company had the courage to push itself against giants like Unilever in the challenging consumer products segment. Hence the starting point was to create the entity which could become the platform to take on the existing oligopolistic dominance of the two MNC players and that is precisely what led to the creation of Rassense Private Limited supported in its vision with funding from a prestigious debt AIF.
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2. What unique challenges did you face in establishing Rassense Pvt Ltd in the competitive market landscape?
Rassense private Ltd had to start by reconfiguring the CRCL LLP through a complex restructuring which involved a cash cum equity transaction involving the three groups of shareholders in CRCL LLP even as the shareholder groups remained invested in a diluted holding structure in the new co.
A significant hurdle in raising equity funding was the poor margins in the business driven by lack of input tax credit on GST for food services, which has greatly squeezed the industry's margins and made it an unattractive bet for equity funding. However, the Rassense leadership remains confident that despite low margins the sector promises a great opportunity for building value for it's employees, shareholders, and clients.
So, we changed the strategy to move from chasing equity capital to raising debt. This prolonged the timeline for raising capital to support our vision as we had to revisit our entire growth strategy and drive revenue growth over profitability. Eventually Rassense Private Limited successfully secured funding from Spark Capital via its AIF, marking a historic first for debt financing in India's food services sector.
3. Rassense Pvt Ltd specializes in corporate food catering. What sets your company apart from others in the same industry?
Well, there are several key factors that have driven our growth, and we are pleased that our clients have directly benefited from these unique aspects firsthand.
Firstly, our use of technology and AI has significantly enhanced the customer experience at our service locations. This integration ensures that customers enjoy a superior and seamless experience when they dine with us.
Secondly, client appreciate the fact that we are the only domestically managed food service company with a professional setup having over 63% of our executive committee members as shareholders. This ensures continuity of leadership, so our clients consistently interact with the same executives, fostering a stable and reliable service experience. Our clients for the first time feel confident that commitments made by the leadership will be sustained, as our ExCom members are deeply invested in client satisfaction since it drives enterprise value and ties into value creation for all. That is why the philosophy of Rassense is anchored in the concept that “together is more’.
Thirdly, and perhaps most crucially, is our local connection to farm produce organizations (FPO). As an Indian company we understand FPOs better and can better connect with them, this understanding and relationship allows us to source fresher, higher-quality ingredients, supported by our lean operational structure, which empowers our management to take greater risks that benefit our clientele.
We are also proud to highlight our leadership in quality and safety training, with a high number of FOSTAC-trained professionals specializing in QHSE within our team with a ratio of 22:1 which is greater than the industry average of 25:1 and means we have higher number of trained food safety professionals.
Moreover, we have distinguished ourselves through innovative practices, such as the adoption of IoT-enabled waste management systems, use of noncarcinogenic chemicals, adapting AI for our processes, setting us apart from competitors and underscoring our commitment to excellence and sustainability.
4. Innovation seems to be a cornerstone of Rassense Pvt Ltd's success. Could you share some examples of innovative approaches or technologies your company has developed or implemented?
Innovation thrives in an environment that is free from bureaucratic constraints. At Rassense, our lean operational structure is what makes our innovative efforts possible. Large corporations often struggle with innovation due to their complex hierarchies, a challenge prevalent across industries from manufacturing to services. Our ability to swiftly embrace risks and learn from failures underpins our innovative capabilities.
For an organization to innovate effectively, it must be prepared to take risks and accept the possibility of failure. One illustrative example of Rassense’s innovation has been able to innovate, we are the first company in this country which had its employees grow vegetables on client site a small but simple example of how we as an Indian company truly connect with local communities. While this may not sound innovative, we believe innovation is when a new idea is developed and has the potential for being commercialized. In doing this, Rassense a very uniquely structured organisation which drives sensitivity in its employees towards FPOs and how an understanding of the farming practices is critical to being able to secure better quality raw material.
Another example was we were the first one in the world to use AI to deliver our pitches. The adoption of AI across our organization from our internal meetings to our data analytics has helped us to build models which equip us to manage a host of our processes better from documentation and financial analytics to manging production waste better. We have coupled that analytics with technology with initiatives like installing IoT enabled waste tracking machines to help us manage our sustainability goals more efficiently.
Another area where we have made strides is in reducing the impact our carbon footprint due to our business through increased local sourcing. This leverages our connections with local farmers and producers, reinforcing our commitment to sustainability and sourcing over 80% our perishables withing 100 km of our production centres.
Recently, we have also innovated in our site mobilization processes, using industry-first tools that have shortened mobilization times and optimized on-site staffing relative to meal production.
These are but a few of the examples made possible purely by the fact that Rassense Private Limited has the youngest executive committee in the food service business in India, 80% of its executive committee are millennials who are intrinsically more oriented towards risk taking and being familiar with tech solutions, something which draws on the demographic dividend of this country to drive change. Only a mindset of being able to adapt change can enable innovation. It is this adaptability to change that enables us to continue innovating and leading in our industry.
5. How does Rassense Pvt Ltd contribute to addressing industry-wide challenges or societal needs?
Rassense has been at the forefront of addressing some of the industry challenges, three of which have been our top priority.
Firstly, we've improved connections with farm produce organizations by removing intermediaries in the procurement of agricultural commodities. This direct approach ensures fresher supplies and better pricing.
Secondly, our operational framework combines professional risk-taking with the latest analytical tools to support informed decision-making. Notably, Rassense stands out as the only food service company in India with 25% of its executive committee comprised of women and 63% being shareholders. This diverse leadership is crucial for advancing our sustainability and environmental goals.
Additionally, we've empowered our site teams to source perishables locally, which has enabled us to procure items within a 45 km radius, significantly reducing the carbon footprint associated with our nationwide food production facilities.
A third significant contribution to our ESG goals is our reduction in the use of carcinogenic chemicals, particularly on larger sites.
These initiatives exemplify how our teams diligently work to not only minimize waste and manage our production chains effectively but also leverage our local expertise to provide sustainable solutions for our clients.
6. Can you highlight some significant milestones or achievements of Rassense Pvt Ltd since its inception?
Although it might seem repetitive, it is worthwhile to summarize the top milestones achieved by our company since its reconstitution.
Our first major achievement was establishing a national presence, enabling us to serve our clients across the country effectively.
The second milestone involved forming an executive committee predominantly composed of millennials, with 80% of the team members from this demographic.
Thirdly, we successfully gained the trust of the investment community, securing a debt fund investment for our traditionally low-margin business. This was a pioneering move within the food service sector and marked a significant milestone for both our company and the industry at large.
Fourthly, we distinguished ourselves as the first Indian food service company to have an executive committee with 25% female representation, leading the way in gender diversity within the industry.
Lastly, we are proud to be the only domestically owned Indian company that implements cutting-edge ERP solutions, including SAP and various advanced digital tools. Additionally, 50% of our executive team has been trained by the Indian School of Business to use AI in transforming their businesses.
These milestones are just a few examples of the significant strides we have made since the company’s reformation.
7. Collaboration and partnerships often play a vital role in business growth. Could you tell us about any strategic collaborations Rassense Pvt Ltd has formed?
The essence of Rassense's philosophy is encapsulated in our brand statement, "together is more," which highlights the value we place on collaboration. Here are a few examples of our partnerships:
Firstly, our collaboration with service providers like SAP and Hexaware led to our nomination for the ISG standout case study award in Connecticut.
Secondly, we initiated an industry-first waste management solution by partnering with MicroGO to deploy IoT-enabled machines.
Thirdly, we have formed alliances with FPO organizations such as Manithuli, Nallakeerai, and SEED to enhance our ability to source locally, reducing the environmental impact of our operations.
Fourthly, we have worked with clients to utilize land on their premises for growing vegetables, which helps educate consuming communities about the importance of quality ingredients in food production.
These initiatives are just a few highlights. We are continually seeking new partnerships with FPO organizations to expand our local sourcing capabilities.
Additionally, our collaboration with John Wiley partnered Strengthscape to develop our leadership team is pivotal. This partnership has established a robust 360-degree feedback platform, fostering trust within our executive committee, and demonstrating our commitment to a transparent work culture. At Rassense, we adhere to a people-first policy, believing that developing our team is essential to delivering the best solutions to our clients.
All these efforts set us apart from the competition. They reflect our commitment to not only external collaboration but also internal teamwork, embodying our philosophy that "together is more" is more than just a slogan—it's the way we operate.
8. In what ways does Rassense Pvt Ltd prioritize sustainability and ethical business practices?
As I have explained earlier, from procurement to production to waste, at each stage we use technology to minimize the impact to ensure that we do business in a manner which helps us contribute to supporting the environment in which we operate.
We integrate technology at every stage of our operations—from procurement to production to waste management—to minimize environmental impact and uphold sustainable practices.
We maintain robust partnerships with farm produce organizations, which allows our production processes to cater specifically to local tastes and needs. Leveraging our Indian heritage, we are adept at providing sustainable and healthier meal options that not only satisfy our customers but also maintain one of the highest customer retention rates in the industry. This focus on local sourcing also helps reduce waste and supports the environment.
Additionally, we have implemented a water conservation initiative that has already saved 75,000 litres of water on a few of our sites. Our "Eat Right Campuses" program has also received commendations from our clients, underscoring our commitment to providing sustainable and healthy meals.
In terms of ethical business practices, securing investment from a debt fund is a testament to our diligent bookkeeping. Rassense is audited by one of the top global audit firms in India, a rarity in the Indian food service industry. This rigorous auditing, maintained even through the COVID-19 pandemic without changing auditors, has bolstered our credibility with both customers and investors. No other Indian food service company has sustained an audit by one of the big five auditing firms, underscoring the high compliance standards we meet due to our professional team’s commitment to ethical practices.
Furthermore, the fact that 80% of our clients are listed companies, spread across the northeast, south, and west of India, speaks volumes about our ethical standards and the quality of governance at Rassense. This widespread trust across diverse geographical regions is a strong endorsement of our commitment to integrity and compliance within the industry.
9. What advice would you give to aspiring entrepreneurs, especially those looking to venture into the food services sector?
One of the major challenges of investing in the food service sector is its inherently low margin nature. Entrepreneurs looking to enter this market must fully grasp its operational challenges, including three critical constraints:
- Supply side fluctuations can cause raw material prices to vary dramatically, by as much as 70% to 80% each quarter;
- Production windows are extremely narrow, requiring all food for the day to be prepared within a 3 to 4-hour timeframe; and
- Consumption can fluctuate daily and by recipe.
In a B2B model, where end prices are fixed, these cost variabilities cannot be easily passed on to the end consumer. This limitation, coupled with fixed annual pricing, restricts the ability to adjust offerings in response to fluctuating input costs. While the prospect of producing food might seem appealing, the complex production cycle and the extensive regulatory requirements add layers of complexity.
Entrepreneurs must be aware of the risks and challenges that come with scaling in this sector. Even large corporations struggle to expand, with market leadership often defined by holding merely a 1% to 2% market share, one of the lowest in any industry category. Thus, new entrants must understand that achieving scale in this space is not only slow but also capital-intensive.
Looking ahead, what are Rassense Pvt Ltd's future plans and aspirations?
The clear objective of Rassense Private limited is to demonstrate that a domestically managed company can be credible alternative to large multinationals in the food service space.
Its second priority is to ensure that its professional management adds value to clients by innovating new processes and adopting cutting-edge technologies to improve solutions within the food service sector.
In collaboration with clients, Rassense aims to increase its enterprise value and generate wealth for its employees and shareholder employees. This commitment positions Rassense as a preferred employer and sets it on a path to become the first Indian food service company recognized for creating wealth for its employees beyond merely providing salaries.
Additionally, given that the executive committee of the company are all shareholders in the company, it would be Rassense aspiration to ensure that it bridges the gap between farm produce organizations and itself as a buyer of their produce, so that supply chain becomes more effective and efficient and better quality ingredients can be procured to enhance the quality of food that we make for our clients.
We believe the role of technology will be crucial here and with the leadership team of dynamic millennials that lead this organization, we increasingly see its adoption in driving new processes and better outcomes for the business.
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